As home values have risen across the country, many homeowners find themselves sitting on a valuable asset: equity. A Home Equity Line of Credit (HELOC) can be a smart way to tap into that equity, whether you're looking to invest in a second property or help your children get a financial head start.
What Is a HELOC?
A HELOC is a revolving line of credit secured by your home. Unlike a traditional loan, a HELOC gives you flexible access to funds, similar to a credit card — but usually with much lower interest rates.
Using a HELOC to Buy Another Home
Whether you're buying a vacation property, downsizing while keeping your current home as a rental, or helping your adult kids into their first home, a HELOC can provide the down payment — or even cover the full purchase in some cases.
Pros:
Access to potentially large sums of cash
Typically lower interest rates than personal loans or credit cards
Interest may be tax-deductible if used for home improvement (consult your tax advisor)
Cons:
Your current home is collateral
Variable interest rates can increase your monthly payments
It adds to your debt load
Helping Your Kids Get Set Up
Parents often use HELOCs to help their children with:
A down payment on their first home
Education expenses
Starting a business or covering early-career costs
It can be a meaningful way to pass on generational wealth — without giving up your savings or retirement funds.
Is It Right for You?
A HELOC isn’t a one-size-fits-all solution. If you have solid equity, stable income, and a clear repayment plan, it can be a powerful financial tool. But it’s important to understand the risks — especially if you’re leveraging your home to help someone else.
Before you move forward, talk to a trusted lender or financial advisor to weigh your options.
